Friday, December 7, 2012

Enbridge Pipeline Expansion Update

Enbridge Inc. has announced that it has received shipper support to proceed with a $6.2 billion program to expand access to markets for growing volumes of North Dakota and western Canada light oil production. The Light Oil Market Access Program (the Program) will provide increased pipeline capacity on Enbridge's North Dakota regional system; further expand capacity on the U.S. mainline system; enhance Canadian mainline terminal capability; upsize the Eastern Access Program and provide additional access to U.S. Midwestern refineries. The Program will provide access from the Enbridge system to attractive refinery markets in Ontario, Quebec and the U.S. Midwest for an additional 400,000 barrels per day (bpd) of light oil.The Light Oil Market Access Program responds to significant recent developments with respect to supply of light oil from U.S. north central formations and western Canada, as well as refinery demand in the U.S. Midwest and eastern Canada. On the supply side, production from the Bakken formation centered in North Dakota has grown from 200,000 bpd to 700,000 bpd in the last five years with potential to expand to 1,200,000 bpd or more in the next five years, if transportation access to refinery markets is available. Additional growth in light crude production of 100,000 bpd or more is also anticipated from the application of the latest recovery technologies to the Cardium and Viking formations in Alberta, Canada. Supply from these areas has become increasingly attractive to refineries in the U.S. Midwest and eastern Canada compared to much more costly alternative sources. The individual projects within the Program are targeted to be available for service at varying dates from 2014 to early 2016. Shippers have provided support for each of the individual projects either in the form of capacity commitments or support for the regulatory approval and commercial framework of the North Dakota and Mainline system projects, including support for the regulatory approval of the North Dakota expansion commercial terms pending before the Federal Energy Regulatory Committee (FERC). The terms approved by shippers for the U.S. mainline system expansion projects include surcharges to be added to Enbridge's Competitive Tolling Settlement (CTS) international joint toll. The Program will require various regulatory approvals and permits.Source: Enbridge